alleged interests arising both from ccnstructive trusts and from general debtor/creditor relationships.
A. STANDING ISSUES ARISING UNDER 18 U.S.C. § 1963(l)(2)
Because 18 U.S.C. § 1963(l)(2) provides standing only to third parties asserting "legal interests in property which has been ordered forfeited to the United States" (emphasis added), and because 18 U.S.C. § 1963(g) allows the Attorney General to restore forfeited property to victims when "in the interest of justice" and "not inconsistent" with other provisions of RICO, it might appear to some that constructive trusts, which are equitable remedies, cannot afford standing to third parties seeking to recover forfeited assets pursuant to § 1963(l). As the Second Circuit has recognized, however, the term "legal" is ambiguous and "may be interpreted to mean 'traditionally enforceable at law,' as opposed to 'traditionally enforceable at equity,' or it may mean, 'according to the law' as opposed to 'according to what is considered just and equitable.'" Schwimmer, 968 F.2d at 1582. While the Court concedes that the latter interpretation may not be as "obviously" correct as the Third Circuit found it to be, Lavin, 942 F.2d at 185 n. 10, it is nonetheless is persuaded by Schwimmer and the cases cited therein that "the term 'legal' in § 1963(l) should be interpreted to mean 'under the law,'" and that beneficiaries of constructive trusts can therefore have standing to seek judicial relief from an order of forfeiture. Schwimmer, 968 F.2d at 1582.
Notwithstanding the above conclusion relating to general notions of standing, it is inappropriate to impose a constructive trust in favor of the specific petitioners presently before the Court. As the record of this case clearly shows, one of the most significant motivating factors behind the Court's approval of the plea agreement between the United States and BCCI was the fact that the agreement provided for the creation of a worldwide victims fund so that "innocent victims of BCCI's wrongdoing can recover at least a portion of lost assets in as fair a manner as possible -- equitable, orderly, and expeditious." Transcript of Plea Acceptance and Sentence, January 24, 1992, at 6. The Court expressly recognized, "Because the fund will be administered on a global scale through unified proceedings, piecemeal and unfair distribution can be avoided." Id. Assuming as true the petitioners' allegation that all deposits made by the purported class of claimants were fraudulently induced, there can be no doubt that imposition by this Court of a constructive trust on those deposits would cause gargantuan disruption of the global liquidation proceedings currently underway. Besides the practical consideration of this Court's inability to adjudicate whether each of the approximately one million depositors can establish that they made deposits and that such deposits were forfeited by this Court, imposing a trust would significantly harm the abilities of other BCCI creditors to recover fair portions of lost funds. Therefore, in accordance with the rationales of Sisters of the Presentation of the Blessed Virgin Mary of Aberdeen, South Dakota v. Nat'l Credit Union, 961 F.2d 733 (8th Cir. 1992); Downriver Community Fed. Credit Union v. Penn Square Bank, 879 F.2d 754 (10th Cir. 1989), cert. denied, 493 U.S. 1070, 107 L. Ed. 2d 1019, 110 S. Ct. 1112 (1990); and Bruneau v. Fed. Deposit Ins. Corp., 785 F. Supp. 585 (E.D.La.), aff'd, 981 F.2d 175 (5th Cir. 1992), a constructive trust in favor of the petitioners will not be imposed.
Given that no constructive trust is recognized, petitioners are considered, in accordance with their own prior description, to be "like the way the Court characterized the Scarfones' claims," Tr. at 18 -- that is, simply as general creditors of BCCI. Unlike the beneficiary of a constructive trust, an unsecured or general creditor does not possess an interest in any specific asset of a debtor and merely has a general interest in the debtor's entire estate. See February 23, 1993 Order Dismissing the March 18, 1992 and September 4, 1992 Petitions of Lee Scarfone, Patricia Scarfone, ALSA International, Inc. and Banditball, Inc., United States v. BCCI Holdings (Luxembourg), S.A., F. Supp. (D.D.C. 1993); Schwimmer, 968 F.2d at 1581 ("A general creditor has no interest in a particular asset or particular funds that is either vested or superior to a defendant's. He may have a right to receive payment, but he does not have a property interest superior to defendant's in any particular asset or funds . . . ."); Campos, 859 F.2d at 1240 (unsecured creditors who filed third-party claims "failed to allege or make a prima facie showing of any legal right, title, or interest in the forfeited property") (emphasis added); United States v. Reckmeyer, 836 F.2d 200, 206 & n. 3 (4th Cir. 1987) ("Unlike secured creditors, general creditors cannot point to any one specific asset and claim that they are entitled to payment of the value of that specific asset. General creditors instead enjoy a legal interest in the entire estate of the debtor."); Mageean, 649 F. Supp. at 828 ("The Court . . . concedes the [unsecured] creditors do not, in a technical sense, have legal interests in the forfeited property."). Because general creditors are unable to assert interests in specific assets, they cannot assert legal rights, titles, or interests "in property which has been ordered forfeited" as required by § 1963(l)(2), at least in situations where a defendant's entire estate is not subject to forfeiture. See Reckmeyer, 836 F.2d at 206 n. 3 ("It is the dilemma of linking their interest to a specific asset rather than the problem of asserting a legal interest in the debtor's estate that frustrates general creditors who attempt to contest civil forfeitures."). Accordingly, given that the Court's Orders of Forfeiture reach only property located in the United States and not the entire estates of the four corporate defendants, the claimants do not have standing to seek amendment of the Court's Orders of Forfeiture and their petitions must be dismissed.
B. ISSUES RELATING TO THE SUBSTANTIVE REQUIREMENTS OF 18 U.S.C. § 1963(l)(6)(A) AND (B)
Even were the claimants found to have standing under § 1963(l)(2), they could not, as general unsecured creditors, be considered to have the "vested" or "superior" rights, titles, or interests in forfeited property which are required by § 1963(l)(6)(A). As recognized by the Second Circuit, "the categories of vested and superior are intended to cover those cases where the Court lacks jurisdiction over the property because it is not really 'property of the defendant.'" Schwimmer, 968 F.2d at 1581 (emphasis in the original). Because unsecured creditors lack property interests superior to a defendant's in particular assets or funds, their asserted interests do not "undermine the court's jurisdiction over the property, and [do] not invalidate the order of forfeiture. Thus, a general creditor has no interest in particular assets or funds that warrants an amendment of an order of forfeiture under § 1963(l)(6)(A)." Id.6
In addition to failing to meet all requirements of § 1963(l)(6)(A), the claimants are unable to satisfy all prerequisites of the only other basis for court-ordered relief, § 1963(l)(6)(B). When defining the third parties who could recover under subsection (B), Congress used the phrase "bona fide purchaser for value," a legal term of art referring to certain buyers of tangible property. See Lavin, 942 F.2d at 185; Campos, 859 F.2d at 1238; Mageean, 649 F. Supp. at 829. Though some courts applying § 1963(l)(6)(B) or its equivalent in the Comprehensive Drug Abuse and Control Act, 21 U.S.C. § 853(n)(6)(B), have interpreted the phrase to include any person engaging in an arms' length business transaction, see, e.g., Reckmeyer, 836 F.2d at 208; Mageean, 649 F. Supp. at 829, such a broad interpretation of the phrase is inappropriate. As Justice O'Connor has noted, "a judge must presume that Congress chose its words with as much care as the judge [herself] brings to bear on the task of statutory interpretation," FBI v. Abramson, 456 U.S. 615, 635, 102 S. Ct. 2054, 2066, 72 L. Ed. 2d 376 (1982) (dissenting opinion), and the literal language of a statute should be conclusive in the absence of a clearly expressed legislative intent to the contrary. See Russello v. United States, 464 U.S. 16, 20, 104 S. Ct. 296, 299, 78 L. Ed. 2d 17 (1983). See also Evans v. United States, 119 L. Ed. 2d 57, 112 S. Ct. 1881, 1885 (1992) ("It is a familiar 'maxim that a statutory term is generally presumed to have its common-law meaning.'") (quoting Taylor v. United States, 495 U.S. 575, 592, 110 S. Ct. 2143, 2155, 109 L. Ed. 2d 607 (1990)). Congress could easily have adopted language in § 1963(l)(6)(B) expressly providing protection to all parties engaged in arms' length transactions with defendants, and its failure to do so is strong evidence of a desire not to provide such a wide avenue of relief. The Senate Judiciary Committee's report on the statute does not provide persuasive evidence of a clear intent to the contrary. It is true that the report recognized that the purpose of the relation back doctrine codified at § 1963(c) was to "close a potential loophole in current law whereby the criminal forfeiture sanction could be avoided by transfers that were not 'arms' length."' S. Rep. No. 225, 98th Cong., 2d Sess. 200-01, reprinted in 1984 U.S.Code Cong. & Ad. News 3383-3384 ("S. Rep.") (emphasis added). However, when the report addressed the nature of the relief available to third parties under § 1963(l)(6), the provision at issue here, it used narrower language and spoke only of vested or superior interest holders and "bona fide purchasers for value." S. Rep. at 209 (emphasis added). Accordingly, in light of the clear statutory language and the absence of an unambiguously expressed contrary intent of Congress, the phrase "bona fide purchaser for value" is interpreted to refer only to a certain class of buyers of tangible property. Because the claimants did not obtain their alleged interests through the purchase of tangible property, they would not be entitled to relief under § 1963(l)(6)(B) even were they found to have standing under § 1963(l)(2).
C. THE PETITIONERS' REQUEST FOR A STAY
At the close of the hearing on the government's motions to dismiss, the petitioners asked for a stay prohibiting the disbursement of forfeited funds in the event the motions are granted. In a written filing submitted after the hearing and in accordance with a briefing schedule set by the Court, the government opposed the request, primarily on the grounds that a stay is premature and unnecessary since no forfeited assets may be disbursed until the Court approves a formal motion for disbursement and until claims to forfeited assets have been "resolved." See Paragraph 7 of January 24, 1993 Order of Forfeiture.
The court-appointed fiduciaries for the corporate defendants agree that the denial of a stay would not result in any immediate disbursement of funds. In light of the procedures set forth in Paragraph 7 and the government's concession that third-party petitioners may submit oppositions to disbursement motions based, inter alia, on the pendency of an appeal, see Government's Brief Relating to Stay Pending Appeal of order Dismissing L-Claim, filed June 2, 1993, at 3-5, the claimants' request for a stay is denied without prejudice. The petitioners' request for a stay may be renewed in the form of an opposition to a motion for disbursement.
For the reasons stated above, it is hereby
ORDERED that the March 11, 1992 and September 11, 1992 petitions filed by Shrichand Chawla, Leo D. Curran, Willy Hermans and Red Circle Investment, Ltd., Jaleh Khorassanchy, Amit Pandya, Soha, Inc., Idriss Devco, Inc., and S&L Gentrade, Inc. are dismissed. It is
FURTHER ORDERED that the petitioners' request for a stay pending appeal is denied without prejudice to renew in the form of an opposition to a motion for disbursement filed by the government. The government shall serve a copy of its motion for disbursement on counsel for the petitioners when such a motion is filed.
IT IS SO ORDERED.
August 19, 1993
JOYCE HENS GREEN
United States District Judge